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Senate plans to invite CBN, banks over high interest rates

Senate plans to invite CBN, banks over high interest rates
June 5, 2017

Senate President Bukola Saraki has said the Senate is concerned about the high interest rates on loans, stating that lawmakers will this week discuss the issue with the Central Bank of Nigeria and the Deposit Money Banks.

He stated that in an economy where workers were being retrenched and people were losing investments, it was immoral for certain sectors to be making astronomical profits.

In an interview with journalists in Ilorin, the Kwara State capital, on Sunday, the Senate President said, “They (banks) will tell you that they are doing business but in doing business, there must be social responsibility. We must be able to sit down and look at ourselves eyeball to eyeball, and we intend to do that; and I can promise Nigerians that we can find a solution. Hopefully with the stability in the forex market, we will now begin to address the high interest rate.

“There is no business that can make money if it is trying to borrow at 28 or 29 per cent. It cannot work and if we cannot get the banks to lend to the real sector and they carry on their money to government instruments, there cannot be growth. So, we must tackle that. I can assure you that I will lead that challenge. We must sit down and discuss it.”

Saraki added, “They are in business to make money but we must look at what money is reasonable in this kind of environment. You may have to reduce that profitability to allow your country to grow. It is that balancing that we need, but in doing that, there must be some incentives. We may have to tell them, ‘Listen, we may have to limit how much you put in government security’.

“What do you do with that extra amount of money? It must go to the real sector. It must go to the business that produce made-in-Nigeria products. They may say that it is too risky to do that. In doing that, we must give them some assistance. This is the kind of negotiation we must make.”

He said the Senate would discuss with the Central Bank of Nigeria and the banks on how to address the high interest rate regime.

The Senate President urged Nigerians to patronise homemade products, adding that people should report any Ministry, Department and Agency that flouted the Senate’s directive that indigenous companies producing such commodities should be given the option of first refusal during public procurement.

On the delay in the signing of the 2017 budget into law, Saraki told Nigerians not to be apprehensive about whether the Presidency would assent to the budget or not.

He said, “There was a comment I read online where the Presidency had said it did not have an intention not to sign. I do not think that (not signing the budget) will happen; I doubt very much.

“Nigerians should not be concerned about that; I am pretty sure that the Executive will sign the bill and we will begin to implement the budget. I am confident that the Executive will sign it very soon. There should be no anxiety there.”

Saraki added that the passage of the Petroleum Industry Governance Bill was another landmark in the Senate.

He clarified that the proposed National Road Fund Bill would not lead to an increase in the current pump prices of fuel in the country.

Saraki stated, “Our roads around the country are not adequately funded. If we are banking on the appropriation process, we will not be able to adequately fund and refurbish our roads.

“Anybody that read the full report would have known that after the public hearing, which involved stakeholders from the road and transport industry, it was recommended that N5 from each litre of petrol should be channelled towards our roads.

“However, this is not going to be an additional N5, but N5 out of the present price of N145 that Nigerians are currently paying at the pump.”

The Senate President aligned with the view that the country would be out of recession in the third quarter of this year.

He stated that the Federal Government under President Muhammadu Buhari had made remarkable progress in implementing measures for Nigeria to exit recession.

Saraki said, “I believe that by the next quarter, we should technically go out of recession. I believe that efforts have been put in place to be able to revive our revenues, bring stability to the Niger Delta and restore confidence to the market.

“The Nigerian currency was undervalued when it was about N500 to $1, because people were speculating and not that it was the true value of the naira. Investors lost confidence in the market. This is the first time you see when our currency has depreciated and also appreciated significantly.

“There are investments now coming in. It is even reflected in the capital market. You can see inflows coming in. I see an upward projection in investment coming in and businesses begin to move.”

He also said it was insensitive of elected political office holders to abandon serious issues of serving their constituents and preoccupy themselves with the 2019 elections.

Saraki noted that 2019 was still a long period for serious-minded politicians to concentrate their energy on to the detriment of good governance.

He admitted that elected public office holders had not met some of the expectations of Nigerians, adding that they should rather be committed to rendering services and fulfilling their electoral promises.

Saraki stated, “The year 2019 is a long way. Any serious-minded politician, who is interested in his people, should not be talking about 2019, especially if we want to be honest with ourselves; some of the expectations of our people have not been met. I think it will be insensitive if we have left that and we are now talking about 2019. We need to work hard to make sure that we meet those expectations.

“The economy is already moving in the right direction, which is why we are addressing the issue of security, which is good. We are fighting corruption; we need to do more in that area. By the time we work tremendously over the next one year, I think we will be in a place where we can beat our chest and say we have done well.”

Saraki added that though financial autonomy for local government areas might be approved during the ongoing constitutional review, it would be more desirable for the LGAs to be adequately funded to address their statutory responsibilities.

According to him, the current allocations to the local governments in the country are not adequate to meet their needs.

He said it might be desirable to reduce the burdens of the councils such as education, which he said would be better handled by the state government.

Saraki stated that without the support of state governments, about 95 per cent of local governments in the country would not be able to pay salaries, talk less of providing infrastructure.

He said, “The finances are not just there. All the 36 states cannot be doing something wrong. I do not think there is a place where the revenues of the LGs can meet their expenditure, despite that they still have responsibilities like primary education.

“We need to review that. Maybe we will go back and look at whether state governments should truly take over primary education, because the arm of government that cannot even meet administrative expenses, you now put on it a very important sector as education.

“There must be something structurally wrong with it and we need to put our heads together and take decisions on the way forward. Maybe we need to review what kind of responsibilities they have.”

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